key reason for this shift is the increasing use among customers of direct contracts with chip suppliers to ensure delivery.
@Barbara,
I agree with you that this is discouraging news for the US distributors, but wondering why are customers directly approaching chip suppliers ? Is it because it will give they cost advantage ?
"the key reason for this shift is the increasing use among customers of direct contracts with chip suppliers to ensure delivery", and semiconductor sellers offered guaranteed supplies to key clients. Avnet, Arrow strategy of establishing one-stop shops is good but they have to consider cost in their services.
@JADEN, are you suggesting that the distributors dont offer guaranteed supply ? I feel many of them dont mind paying extra if they get one-stop solution because they dont have to worry about searching for the data.
I believe that the key that leads the consumers to commit direct sales and over passing the distributors is the price of the product and how much it costs. Even if the price is a bit more I don't think the customer should choose to do a direct sale (given the transport costs).
Many of the design engineers are oriented towards faster design and development in order to shorten the product life cycle. In tact with that they feel they can get more clarity on the chips chosen with direct contact so that they have not been confused by distributor as there are many chip companies offering the same soluition.
@saranyatil, the whole purpose of distributor is you will get access to data from many chip companies so that you can choose the best. How else do you think design engineers can choose the best solution available in the market ?
I think, trust worthiness is a major factor in any business. Due to the presents of counterfeit components in market, most of the companies are trying to get the components directly from the manufactures. Another major factor is, if third partyor distributors are not involved in this chain, companies can get the components with a better price tag and hence the procuring expenses can be reduced considerably.
One more reason for this trend may be that supplier like to serve key customers by themselves directly. I have experienced this for many years. Many time distrubutors come with FAE from supplier and introduce product to you. However, distributor comes to you with many FAEs from competing chip supplier. Some chip supplier do not want to miss opportunity and they feel that distributor is not putting required effort for their products and start interacting directly with cusotmer.
Customer also has time to market limitations and may need to keep in close contact with chip supplier. Some time they have to bypass distributor to get the lowest price.
Distributor can reverse this trend if they add more value to process in all technical, price and delivery.
Thanks for readers' input regarding suppliers selling direct. The fact that several of our readers say that suppliers prefer the direct approach is very interesting to me. For the most part, the opposite is true in the West--and I have had suppliers tell me this. Dealing with the demands of small to midsize OEMs is difficult for suppliers in terms of manging demand and delivery, and, for a period, issuing credit as well. Reluctant customers have even come to belive they get better service through distributors. I'd like to hear more about how suppliers in China manage to maintain direct realtionships with customers--it's a tough task
It sounds like customers have a lot of clout in China, which is consistent with what we have been hearing. I'm curious about the bank comment, however: companies in China never buy anything on credit?
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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